Business confidence falls across the UK

Business
confidence has fallen in 10 of the UK’s 12 regions, with the two exceptions
only narrowly escaping a fall themselves, according to a new survey.

The
Regional Trends Survey, by the CBI and Experian Business Strategies, shows that
the only two regions to avoid a decline in sentiment over the last quarter were
Northern Ireland – recording a balance of plus 1 per cent – and the South East

and
London – recording a balance of plus 3 per cent. Wales suffered the sharpest
drop in confidence in the UK, reporting a balance of minus 38 per cent.

But
the survey showed more encouraging signs for exporters over the next quarter.
For the first time in 15 months, more than half of the UK regions expect export
orders to rise. Most optimistic of the six regions predicting a rise are the
North West and Wales, followed by Yorkshire and the Humber, the East Midlands,
Northern Ireland and the South East and London.

Over
the last three months, just three of the UK’s 11 regions recorded a rise in
total orders. The North East and Northern Ireland recorded the highest
increases, and both regions also recorded the only increases in export orders
last quarter.

Five
regions expect total orders to rise over the next three months. The North East
predicts the strongest increase, while the West Midlands anticipates the
largest decline.

Northern
Ireland is the most optimistic of five regions that expect output to pick up
over the next three months. The West Midlands leads the regions expecting
output to decline.

With
domestic demand under particular pressure, every region but three reported a
fall in domestic prices, with the South West and Scotland experiencing the
largest declines.

Peter
Gutmann, Associate Director of Experian Business Strategies, said: "The
export optimism expressed by a number of regions is encouraging amid the
persistently gloomy picture portrayed in this survey. Similar optimism a year
ago proved to be a false dawn, as the global recovery petered out. This time we
have a more competitive exchange rate and renewed expectations of a global
economic upturn. While evidence of recovery is not wholly convincing, it is
sufficient to justify the more upbeat export outlook."

Firms
expect employment to contract in all but one region. The largest decline is
expected in the West Midlands, followed closely in the South West and Wales.
Employment is expected to rise slightly in the North West. Overall, the CBI and

Experian
Business Strategies predict 38,000 UK job losses over the next quarter.

Doug
Godden, head of economic analysis at the CBI, said: "Firms across the UK
are struggling to keep their heads above water, with severe job shedding
predicted in almost every region and confidence low.  Manufacturers will take some comfort from positive export
expectations scattered across the country, but are in no doubt about the uphill
battle that lies ahead.

"Though
interest rates may be at the appropriate level for the time being, the Bank of
England should remain vigilant.  Further
rate reductions may yet prove necessary later in the year should the elusive
global recovery fail to materialise."

By
Quentin Reade

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